Parliament and council differ over law’s implementation
The Solvency II preparation process faces yet more slippage, a senior Euro-regulator revealed last week.
Paolo Cadoni, who chairs the European Insurance and Occupational Pensions Authority internal model committee, told an FSA Solvency II update conference last week that a key building block of the long-delayed EU insurance directive will not be ratified by the European parliament until early next year.
The Omnibus II directive, which provides the framework for Solvency II, had previously been scheduled to go before MEPs on 22 November. But Cadoni told the FSA conference last week that a plenary vote on Solvency II will now not be held until January or February next year.
The new date meant the vote should take place in tandem with several other steps for implementing the directive. The Level II guidance, which details how the directive will be implemented, is due to be passed to the parliament at the beginning of next year with a view to being put out to consultation later in 2012.
In the meantime, the parliament will negotiate with the Council of Ministers and the European Commission to iron out the final shape of the Solvency II directive.
The European Parliament and the Council of Ministers, which is made up of representatives of the member states’ governments, have agreed on the revised date of New Year’s Day 2014 for implementing Solvency II.
But they do not see eye to eye on the dates for transitional measures. For example, the parliament wants Solvency II to be transposed into national law by 31 December, 2012 - three months earlier than the council’s proposed date. Responding to the confusion, ABI director-
general Otto Thoresen said: “ABI members do not welcome the delay in Solvency II’s implementation.”
But the FSA has signalled that it may ease the Solvency II process for UK insurers by relaxing its regulatory requirements in the run-up to the directive’s implementation.
At last week’s conference, the City watchdog’s insurance director Julian Adams said firms may be able to use the directive as a proxy for the UK’s own individual capital assessment (ICAS) solvency requirements during 2013.
The move has been prompted by concerns that UK insurers would needlessly duplicate resources after the EU’s announcement that they will have to comply with both the Solvency I and II regimes as well as ICAS in 2013.
Adams said that insurers had to comply with Solvency I because it was European legislation, but there was more scope in relation to the UK’s homegrown ICAS regime. He said: “Our intention is to explore with firms possible ways of avoiding the costs associated with the dual running of an ICAS and Solvency II model.”
PricewaterhouseCoopers insurance partner Jim Bichard, commenting on Adams’ announcement, said: “The FSA has given some hope to firms fearful of having to satisfy dual supervisory regimes in the run-up to Solvency II.”